Modification of the precedent of mandatory compliance regarding trademark cancellation for non-use

In order to establish more objective criteria in the application of the third paragraph of Article 165 of Decision 486 which approves the Common Industrial Property Regime in the Andean Community, the Court of INDECOPI has issued a precedent of mandatory compliance by means of Resolution Nº 2076-2016-TPI-Indecopi of June 27, 2016 and published in the official gazette “El Peruano” on September 6, 2016, which modifies the previous precedent of mandatory compliance established by Resolution Nº 1183-2005-TPI-Indecopi of November 8, 2005 issued by the same Court.

By virtue of the third paragraph of Article 165 of Decision 486, it is established that “Where the non-use of a mark affects only one or some of the goods or services for which the mark was registered, a reduction or limitation of the list of goods or services included in the registration shall be ordered, thus deleting those goods or services in respect of which the mark has not been used shall be eliminated; to that end the identicalness or similarity of the goods or services shall be taken into consideration.” The previous precedent of mandatory compliance established, as one of the criteria to be taken into consideration when applying said rule, to keep valid the type of products or services included in the trademark registration, provided that the use of the trademark at issue be proven to identify, at least, a product or service that, despite not being specifically detailed in the list of products or services distinguished by said trademark, was identified in the type of products or services registered.

To that end, it was considered that the products or services that were part of a same type keep similarity among themselves; ergo, the validity of the trademark had to be kept in respect of those products or services that, despite not being specifically detailed in the specification of goods or services of the registered trademark, could be considered as belonging to a same type of products or services. Nevertheless, as determined by the authority, considering the caselaw issued in the last years, the competent national office has been able to notice that similarity not always exists among products or services that belong to a same type. So then, if the use of the trademark is demonstrated for a product of service which is not specifically detailed in the list of products or services distinguished by said trademark, it will have to be verified not only if said product or service is part of a type of products or services expressly distinguished by the trademark, but also if such product or service keeps similarity with the other products or services comprised in said type.

Justification is that in this way, in the authority’s judgment, the essential and functional purposes of the obligatory use of the trademark, established in legal scholars’ writings, are met. As to the essential purposes, these aim at contributing to the consolidation of the trademark as immaterial good by the association between the mark and the product/service in consumer’s minds since the use of the mark is transcendental for this association to come true and, thus the formal content of the registration is brought closer the concrete reality of the use of trademarks in the market.  As to the functional purposes of the obligatory use of the trademark, these aim at decongesting the trademark register so that only those which are actually being used in the market remain in the register, the range of available trademarks being wider and the impediments to new applications being less.

Consequently, the fact that the use of the trademark is demonstrated for a product or service comprised in a type of products or services distinguished by said trademark, does not necessarily and automatically determine that the validity of the registration of the trademark object of cancellation for non-use ought to be kept with respect to said type of products or services. Instead, this will be conditional on the fact that the specific products or services, which use has been demonstrated, keep similarity with the other products or services comprised in the type distinguished in the trademark registration; otherwise, the products or services identified by the trademark will have to be reduced or limited only to those which use has been demonstrated.

To illustrate the above-mentioned, the precedent of mandatory compliance establishes the following:

1. 1. If trademark “X” distinguishes products/services “a, b, c, d, e, f, g” but proves the use only for products/services “a, b, c, d”, then the registration will be cancelled for products/services “e, f, g” and will be kept valid for products/services “a, b, c, d”.

   2. If trademark “X” distinguishes products/services “a, b, c, d and others in the class” but proves the use only for products/services “c”, then the registration will be cancelled for products/services “a, b, d and others in the class” and will be kept valid only for products/services “c”.

   3. If trademark “X” distinguishes products/services “a, b, c, d and others in the class” but proves the use only for products/services “k” (where “k” is not specifically detailed in the list of products/services but belongs to “and others in the class”), then the registration will be cancelled for the products/services “a, b, d and others in the class” and will be kept valid only for products/services “k”.

   4. If trademark “X” distinguishes products/services “a, b, c, d, e, f, g” but proves the use only for products/services “b+” (where “b+” is not specifically detailed in the list of products/services but belongs to “b”; nevertheless, it does not keep similarity with all products comprised in “b”), then the registration will be cancelled for products/services “a, b, c, d, e, f, g” and will be kept valid only for products/services “b+”.

   5. If trademark “X” distinguishes products/services “a, b, c, d, e, f, g” but proves the use only for products/services “b+” (where “b+” is not specifically detailed in the list of products/services but belongs to “b”; and “b+” also keeps similarity with all the products comprised in “b”), then the register will be cancelled for products/services “a, c, d, e, f, g” and will be kept valid only for products/services “b”.

   6. If trademark “X” distinguishes products/services “a, b, c, d, e, f, g” but proves the use only for products/services “m” (where “m” is not specifically detailed in the list nor belongs or is similar to “a, b, c, d, e, f, g”), then the registration will be cancelled for products/services “a, b, c, d, e, f, g” and the trademark will not be kept valid.

Basically, the precedent of mandatory compliance establishes restricting the application of the rule to keep valid the trademark only and exclusively for the products or services in respect of which the use of the trademark has been demonstrated (before this modification, it was allowed keeping the trademark valid for the products that belonged to the same type as those for which the use of the trademark was proved). Specifically, in the case which motivated the new precedent of mandatory compliance, the owner of the trademark, on which the cancellation action for non-use was based, demonstrated the use of the trademark for “bow saws for cutting meat” whereas the trademark was registered for “hand tools” in international class 08. Before adopting the new precedent, said trademark would have been kept valid for “hand tools” since “bow saws for cutting meat” would be comprised in hand tools. Now, with the new precedent, the trademark will be kept valid only for “cleavers” since the owner of the registration only demonstrated the use for this product and not for other hand tools although bow saws for cutting meat belong to this type of products. Therefore, the validity of a trademark will be kept only in respect of those products or services that keep similarity with the other products of services comprised in the type distinguished by the trademark registration.

This matter is controversial and debatable but what does not change is that, in the interpretation of the rule, the trend of the authority regrettably always aims at finally restricting the protection of the Intellectual Property.

The precedent of mandatory compliance has something positive. The resolution, in its analysis section, despite not being part of what is established as precedent of mandatory compliance, states that in the case of service marks, the use can be limited to advertising at commercial establishments or on objects that are used for rendering the service (the placing of the registered service mark in objects or places that can be perceived by the public as identifiers of a business origin such as signs, price lists, catalogs, fliers, three-page leaflets, inserts, budgets, headed paper, as well as effective advertising of the service mark with respect to the services it distinguishes). It is further stated that in service marks the advertising has more importance than in trademarks, the most important being to think over if the advertising is sufficient to indicate that the mark identifies a particular business origin.  It is important to highlight the foregoing since, unlike what occurs in the cases of trademarks where invoices and sales receipts are the most useful evidence, the proof of actual and real use of the mark in the market in the case of cancellations actions affecting service marks has always been more difficult since invoices and sales receipts usually does not state and detail the service rendered under the service mark.